The controversial California healthcare chain seeking to purchase Christ Hospital has pulled out of the deal, two sources have told The Jersey Journal.

The news could be devastating for the Palisade Avenue hospital. Hospital officials have said since announcing the deal in July 2011 that the sale would be vital for Christ Hospital’s financial stability.

Christ Hospital officials could not immediately be reached to comment. A Prime spokesman declined to comment, saying any information would have to come from Christ Hospital.

The proposed deal, which was under review by the state Attorney General, would have allowed Prime Healthcare Services, which owns 14 acute-care hospitals in California, to purchase the Palisade Avenue medical facility for $15 million cash, in addition to a pledge of $35 million in infrastructure improvements, according to paperwork filed with the state.

There’s no word on why the deal may have fallen apart, but a Jan. 25 letter from Deputy Attorney General Jay A. Ganzman to an attorney representing Christ Hospital may hold some clues. In the letter, Ganzman said the hospital needs to hand over a wealth of information before state officials can give the proposed acquisition their OK.

Among the requests are the details of future compensation arrangements between Prime and the hospital’s current senior management. The hospital had tried to keep these arrangements private until after the deal was approved, but Ganzman writes that the state needs to review all contracts between Prime and Christ officials.

In the letter, Ganzman also tells Christ officials they need to give a reason why they did not accept a $91.6 million offer from Hudson Hospital Holdco, which owns Hoboken University Medical Center and Bayonne Medical Center.

Opponents of the proposed Prime takeover are crowing today. Ann Twomey, president of the Health Professionals and Allied Employees, the union that represents Christ nurses, said it would have been “a bad deal for our community.”

Save Christ Hospital, a community group formed in opposition to the proposed sale, said today that it worked with Christ nurses and state and local officials to show that the deal “did not withstand the light of public scrutiny.”

“We recognize that Christ Hospital needs help to reorganize to continue its mission of serving our community with quality, accessible health care,” said Paul Bellan-Boyer, the group’s president. “With other potential buyers, and the Hospital's financial fragility, it is important that the next steps be in the right direction.”